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Step 3: Risk management policy What is risk and why does it matter General approach to risk management Who is responsible for risk management Processes for identifying, reporting & evaluating risk How you manage risk How you monitor/update your risk management policy (*Don’t forget about actually implementing your policy!)

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Reporting obligations Notify the SRA promptly: of serious financial difficulty of any indicators of serious financial difficulty, eg breach of bank covenants inability to pay PII premium, rent or salaries if you become aware your business may not be financially viable to continue trading as a going concern of any serious issues identified as a result of your financial monitoring

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What could damage a firm’s financial viability? Common issuesThings to consider Loss of major clientsAre you over-reliant on one or a small number of clients/introducers? Loss of key peopleCan you institutionalise the relationship with clients? Inappropriate bank funding Is too much finance being provided through an overdraft ? InvestmentHow will the investment be financed? Poor budgets and MIDo you prepare detailed budgets & monitor fee income/expenses/cash flow performance against budgets?

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